Today, enterprises rely on applications to run their business. Applications power sales and marketing, operations and finance from one end of the business to another. However, it is very expensive to develop, manage, and secure enterprise applications in-house. Managed applications come into play in this case.
A software application that is deployed, hosted and managed by a third-party service provider is called a managed application. Managed application costs a monthly or annual subscription fee for use rather than purchasing licenses and managing the applications themselves. By offering simplicity, cost saving and security for enterprise customers looking for better software usage, this is a managed services approach.
In this article, we will analyze the cost-effectiveness of enterprise application managed services by exploring the following key areas:
- The Challenges of In-House Application Management
- The Benefits of Managed Applications
- Cost Savings and Flexibility
- Enhanced Security and Compliance
- Improved Uptime and Support
- Considerations When Adopting Managed Applications
In the end, enterprises will have a good idea of how managed applications will help them cut costs, maximize efficiencies, and reallocate internal resources to core competencies, not application management. The pros and cons of adopting managed applications will also be discussed to help enterprises decide if a managed services model is right for their business needs.
The Challenges of In-House Application Management
Traditionally, enterprises have relied on in-house IT and development teams to procure, deploy, manage, update, and secure business applications. However, this traditional approach comes with several key pain points:
High Capital Expenditures
Enterprises must spend a lot of money upfront on application licenses. Application management also requires additional investments in hardware, infrastructure, and IT staff.
Complex Integration
Enterprise application integration requires a specialized skill set ranging from ERP, CRM, HRM solutions. The nature of this work can sometimes distract the in-house IT teams from working on strategic business value enhancing initiatives.
Version Upgrades
Keeping applications up-to-date with the latest features and security updates involves extensive testing and validation work. IT teams must spend valuable time and effort upgrading multiple applications.
Compliance Burdens
Adhering to regulatory compliance regarding data security, privacy, and industry-specific mandates requires considerable effort for enterprise IT teams, who also have application management responsibilities. Staying on top of changing compliance needs across applications further distracts IT teams.
Lack of Flexibility
For enterprises based on on premises application, it is difficult to adjust application capacity as per changing business needs. The enterprise is unable to scale capacity up or down as the procurement cycles for additional application licenses are limited to the procurement cycles of the enterprise.
These challenges highlight the resource consuming, costly and complex nature of in house application management for modern enterprises with traditionally deployed applications. These pain points for enterprises are addressed by managed applications in a cost effective manner.
The Benefits of Managed Applications
Here are the key benefits enterprises can realize by adopting managed applications:
Cost Savings and Flexibility
The most impactful benefit of managed applications is significant cost savings for the enterprise. The managed services model eliminates large upfront capital expenditures on application licensing and infrastructure. Instead, enterprises pay predictable subscription fees monthly or annually for the managed applications.
Enterprises also save costs by offloading the expenses of application management, maintenance, and upgrades to the managed services provider. This allows enterprises to convert fixed costs into flexible operating expenditures that scale up and down based on usage and business needs.
Some key cost savings and flexibility factors enabled by managed applications include:
- No large upfront licensing, hardware, or implementation costs
- Predictable operating expenditures rather than variable capital expenses
- Automatic inclusion of maintenance, upgrades, and new features
- Flexible subscription models allow capacity adjustments
- Retire applications easily without asset write-downs
Nokia notes that enterprises can realize an average savings of 25% over five years over the use of SaaS-managed applications instead of traditional conventional on-site applications.
In short, enterprises using managed applications are able to get all the benefits of an application without the burden of managing it on their own.
Enhanced Security and Compliance
Victim enterprises have to suffer huge financial losses and damage to reputation because of data breaches and cyberattacks. Managed applications offer a comprehensive security and compliance measure that far exceeds what most in-house IT teams can offer.
Leading managed application providers leverage advanced security technologies and strict controls, including:
- Encryption of sensitive data in transit and at rest
- Rigorous access controls and role-based permissions
- Continuous network monitoring to detect threats
- Frequent audits and penetration testing
- Dedicated security staff focused on preventing intrusions
- Quick deployment of security updates
On the compliance front, managed services providers stay continually updated on industry and regional regulations. They implement appropriate controls across their application architecture and processes to enable customer enterprises to compliant manage providers undergo stay.
Most applications also have independent certifications, such as SOC 2 and ISO 27001. These validate their security and compliance postures, instilling further confidence in customer enterprises.
By leveraging managed applications rather than handling security and compliance in-house, enterprises drastically reduce their risk exposure. The specialized expertise of managed application providers in security and compliance frees up enterprise IT teams to advance strategic initiatives.
Improved Uptime and Support
Enterprise applications are critical to sustaining daily operations and driving productivity across the business. Hence, any downtime of key applications directly translates to revenue loss and business disruption for enterprises.
Managed application providers offer guaranteed uptime exceeding 99.9% for enterprise applications via comprehensive cloud infrastructure protections. These include:
- Geographically dispersed and redundant data centers
- Real-time failover and data replication across locations
- Rigorous disaster recovery provisions
- Continuous infrastructure monitoring
- Regular patching and maintenance during low-usage hours
With managed applications, downtime risks are transferred from the customer enterprise to the managed services provider. Financial penalties in the contract for any breaches of uptime SLAs by the provider incentivize robust continuity protections.
Managed application providers also offer vastly superior application support capabilities compared to in-house IT teams. Access to technical experts who are available 24/7 and will troubleshoot issues in any application would be open to enterprises. Most of the time, tickets are resolved within one hour so that enterprises can get back to business as usual.
Managed application providers provide enterprises with performance guarantees and exceptional support response, thus allowing enterprises to achieve the highest application availability and productivity.
Considerations When Adopting Managed Applications
Clearly, managed applications provide indisputable cost savings and security, compliance and availability for enterprises over traditional application management approaches. However, enterprises must evaluate a few key parameters when assessing managed application providers:
Technology Capabilities. The provider should offer a comprehensive suite of current enterprise applications leveraging modern cloud-native, mobile, analytics, and AI technologies. API support for custom integrations is also essential.
Industry Expertise. The provider should have extensive experience in the enterprise’s industry vertical and related compliance needs. Vertical-specific application extensions, integrations, and configurations should be available out-of-the-box.
Support and SLAs. 24/7 localized support, guaranteed uptime exceeding 99.9%, and quick SLA breach resolutions are must-haves to ensure optimum application availability.
Security and Compliance. Regular audits, such as SOC2 and ISO certifications, validate the rigorous security and compliance standards maintained by the managed application provider.
Migration Support. The provider should have proven methodologies and tools to simplify the migration of legacy application data to highly managed applications.
Global Scale and Stability. The application provider must demonstrate the capacity, processes, infrastructure security, business continuity protections and financial stability to deliver managed applications at a global enterprise scale.
Conclusion
This article presented a detailed analysis of the compelling benefits of adopting managed applications for enterprises:
- Significant cost savings compared to traditional application licensing and management
- Enhanced security, compliance and risk protection
- Superior uptime and support response
- Higher operational flexibility and scalability
Managed applications allow enterprises to access best-of-breed software needed to power specific aspects of their business without the overhead of managing those applications in-house. This empowers enterprises to focus their high-value technical resources on software capabilities that differentiate the business in the marketplace rather than commoditized applications for back-office functions.
Leading managed application providers, such as Salesforce, Workday, ServiceNow, and Adobe, offer subscription-based models that allow enterprises to quickly integrate industry-leading CRM, HCM, ITSM, and marketing applications. SAP, Oracle and Microsoft also have global players offering managed enterprise application suites at scale.
Enterprises can determine the right managed application partner to power their software application needs cost-effectively by assessing parameters like technical capabilities, compliance coverage, support SLAs and migration assistance.
A managed applications model is the future of enterprise software and not in highly complex traditional software licensing and implementation approaches. Managed applications enable enterprises to enter a position of accelerating growth and efficiency by leveraging the best-of-breed capabilities in the software without having to manage the applications themselves. This software delivery model provides very compelling cost savings, flexibility, better security, better support and better innovations that are cloud-enabled.